In the years immediately following the passage of the American Recovery and Reinvestment Act, interest rates ________, and the prices of goods and services ________.
A. remained high; barely changed
B. fell dramatically; rose at higher-than-normal rates
C. rose sharply; fell sharply
D. remained low; rose at lower-than-normal rates
Answer: D
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Regarding central bank independence
A) the Fed is more independent than the European Central Bank. B) the European Central Bank is more independent than the Fed. C) the trend in industrialized nations has been to reduce central bank independence. D) the Bank of England has the longest tradition of independence of any central bank in the world.
The sum of the current yield and the rate of capital gain is called the
A) rate of return. B) discount yield. C) perpetuity yield. D) par value.
Consider the distributed lag model Yt = ?0 + ?1Xt + ?2Xt-1 + ?3Xt-2 + … + ?r+1Xt-r + ut. The dynamic causal effect is
A) ?0 + ?1 B) ?1 + ?2+…+?r+1 C) ?0 + ?1+…+?r+1 D) ?1
Which of the following is not true of a recession?
a. The economy is overheated. b. Cyclical unemployment is high. c. Unemployment is caused by insufficient spending. d. If the economy is in equilibrium, the aggregate expenditure line is too low to create an intersection at the full-employment level. e. If employers hired more workers to reduce unemployment, they would be unable to sell all the extra output those workers would produce.